Blank

Businesses in Transition: Where Value is Created and Destroyed

Ralph Welborn on March 24, 2015

Health, Finances, Telecommunications… Everywhere, companies are being shaken by transformation – a fancy word simply reflecting changes in economic logic, technology affordance and new ways of engaging with customers, and in the market.

The interesting thing about transformation is that the same old, same old ways of doing what you did no longer works. Remember the Red Queen – the character from Through the Looking Glass – who runs faster and faster but stays in the same place? She is *the* ideal symbol of businesses and leaders facing transformation – running faster and faster but within a world that no longer exists.

Even uncontested leaders often run the risk of the Red Queen race – and the threat of increasing competitive relevance – because of these changes… but transformations mean opportunities too. Insight into the dynamics of businesses – and systems – in transition provides perspective, of course, into risks… but more interestingly, into opportunities for distinctive and sustainable value.

So, how do you acknowledge the former and exploit the latter? And here it gets interesting! In short: what’s needed: a change of mentality – of how you ‘make sense’ and consequently ‘take action’ on what you are doing, and how you are doing so.

These changes in economic, technological and behavioral ‘logics’ have profound implications on:

1) where and how value is being created… and destroyed
2) new ways of working together… and engaging the market
3) the skills – the know-how, know-that, and know-why – needed to succeed.

1. Where and how is value being created… and destroyed

In a connected world, companies aren’t isolated entities anymore. They operate within ecosystems where others’ decisions and actions affect them, and vice versa – where decisions made and actions taken have ‘ripple effects’ – both intended and not throughout the ecosystems in which they are embedded. This simple insight – that of being embedded within an ecosystem – has an extraordinarily simple, but profound implication on the typical questions underlying strategy.

The classic strategic questions – how to drive more top-line growth, how to reduce costs, and how to shape the market perception of one’s value proposition- are still important. But they are not the fundamental question that an ecosystem perspective drives you to. The new question, from this perspective, is where and how *is* value being created… and destroyed? The very act of asking this question pushes you down the path of taking an ecosystem perspective – and begins to provide insight into, ok, so, where and how, who and when, is value being created… or not.

This very question forces you to ask a follow-up question: ok, if the question is where and how is value being created, and destroyed within the ecosystem in which I am embedded… then… how do I shape that ecosystem to capture that value in a way that is distinctive, and sustainable? And… how do I do so that creates the opportunity for both greater economic value… and societal benefit?

So, how do you do that? Many possibilities exist, all with profound implications.

Take Nestlé, which changed its focus from food to nutrition and wellness. By doing so, it created a sustainable competitive advantage and obtained economic value from a societal benefit. Take also GE, which is using their know-how in engaging with health problems, creating new devices to bring medical care to remote rural communities. The same happens with Medtronic, that found a way of making a positive impact and interact with their ecosystem by struggling against chronic non-communicable diseases in developing countries, with local agents as partners.

2. New ways of working together and engaging the market

Insight into what it means to engage in a connected world provides insight not only into where value (and potentially greater societal benefit) is created, but also new ways to engage the market to do so. Companies are exploring new alternatives to share risks or motivate individuals to generate collective impact.

Collaboration strategies are showing good results to achieve these goals: Companies such as Tesla prefer to open up their patents to reduce their risks and accelerate their return in the way to make electric vehicle a winning category, by benefiting from others inputs.

Peer to peer marketplaces, crowdfunding and open innovation platforms or co-creation projects are some other examples of this new way of engaging with others to work, leveraging advances in technology to collaborate in a more agile way.

These are not isolated examples: a new shared-value economy is arising as a collaborative manner to create value in spaces where neither governments nor private sector do.

3. the New 20% of Skills, Capabilities, and Assets

Adapting to this new world requires developing a new set of activities and competencies. Here’s the blunt reality: the 20 % of assets / capabilities – those skills, processes, technologies, know-how, know-that, and know-why – that drove 70% of your value yesterday will be very different from ‘the new 20%’ critical for tomorrow Just look at the ‘topple rates’ of companies that used to be the industry leaders over the past years, or the new household names today… and we all know that there will be new business household names tomorrow… based on what? The new 20%.

In short… strap it on… based on new ways to ‘make sense’ to ‘take action’ in the ecosystems in which you are embedded.

From Imaginatik we want to guide you in the journey to face the whole set of transformations and find new sources of value. All companies have the capacity to innovate. They just need to find their way.

Comments are closed.

IMAGINATIK, INNOVATION CENTRAL, DISCOVERY CENTRAL, INNOVATION CONNECT and other trademarks, service marks, and designs are the registered or unregistered trademarks of Imaginatik plc in the United States and other countries. All other trademarks are property of their respective owners.